Paul -
It looks like there is serious concern amongst the G7 about the possible consequences for Asia should Japan slip into recession. Prodding, prompting, and pleading haven't worked, and so now they have resorted to verbal bullying to goad Japan into doing something to prevent this. Restructure, spend, deregulate, open their markets, cut taxes, anything. It doesn't look like Japan is having any of it. Europe and the US would like Japan to encourage consumer spending to help pull the rest of Asia out of the Quagmire. Japan says no way, Washington and Brussels say "your neighbor's house is on fire, and you are not doing your part to help put it out". Of what is the Japanese house made, disclosure is poor, noone really knows. Will it also catch fire and burn? On one hand they don't want the yen to be too weak but on the other, how are they going to compete with other Asian economies whose currencies have been devalued. Japan and Europe both remain exposed on Indonesian debt, but Europe is probably better able to deal with the blow than Japan is. I think the big question is, "What are the consequences should Japan slip into recession"? The concern of the G7 highlights the fact that events in Asia have yet to run their course. This is not over yet by any means.
Tom |
